Washington, D.C., partner Elliot J. Feldman, leader of Baker Hostetler's international trade practice, recently was interviewed by China’s National Economic Weekly regarding how to invest in the United States. The National Economic Weekly is a Xinhua News Agency affiliation that has a circulation of 200,000 and a very large online readership.
Feldman highlighted several important issues that were unknown to most Chinese business leaders but were emphasized in Mergers & Acquisitions in the United States: A Practical Guide for Non-U.S. Buyers, a treatise for CCH/Wolters Kluwer/Aspen coauthored by a team of 27 Baker Hostetler attorneys under his direction. First, he recommended potential Chinese investors to start Greenfield projects, and carefully select origination and destination of their investment to fully utilize preferential tax treatments offered by bilateral investment treaties and U.S. tax laws.
Episodes of failed Chinese investment initiatives in the United States have persuaded many Chinese that national security is a post 9/11 excuse to restrict China in the U.S. economy. However, in Feldman’s view, China’s business leaders have no reason to be deterred by the Committee on Foreign Investment in the United States’ review process. The United States is the most open major economy in the world, and the treatise demystifies how to navigate through this process by providing specific and detailed guidance, through real-world examples.
Additionally, he reminded the Chinese investors not to miss the forest for the trees. For instance, they need to evaluate carefully intellectual property rights, which could be the most valuable asset to be acquired in a deal for a U.S. company. Also, it is prudent and wise to retain the best lawyers and other professionals in conducting due diligence. Although expenses might seem high, it pays off in the long run to engage the best. He alerted the Chinese business community that minimizing potential legal risks is as important as maximizing financial profits in investing in the United States.
At the end of the interview, Feldman advised the Chinese business leaders to adopt the German management model once they set up facilities in the United States. In order to win the hearts and minds of U.S. politicians and people, he suggested Chinese companies hire more U.S. workers and actively engage them in operations.